According to Reuters, Chesapeake Energy’s bankruptcy plan was approved by U.S. bankruptcy judge David Jones. The U.S. gas company “will emerge from bankruptcy with about $3 billion in new financing, a $7-billion reduction in debt, and $1.7 billion cut from gas-processing and pipeline costs.”
Investors who committed to backing the restructuring of the company’s finances will benefit greatly. In fact, a rebound in energy prices bumped Chesapeake’s value to about $5.13 billion.
Bloomberg reports that Chesapeake’s ownership will be transferred to Franklin Resources Inc., a global investment firm. The approval follows objections from other creditors who argued that senior lenders were getting Chesapeake at a discount through two refinancing deals.
Download Chesapeake Wells Drilled Last 24 Months
The creditors claim that one transaction refinanced $1.5 billion in debt owed by an insolvent unit, while the second one turned $2.2 billion of unsecured debt into secured debt, which has a higher interest rate.
In addition, Chesapeake was among the victims of the latest crisis in the price of oil, in which more than 40 oil producers in the U.S. filed for bankruptcy in 2020. Altogether, their debt totalled $28 billion.
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